The
on-demand workforce has grown considerably over the years. In the US
alone, more than 750,000 people drive with Uber. And while on-demand
work still accounts for a relatively small portion of the total US labor
force, it has emerged as an important focus of academic research.

We
have been fortunate to collaborate with many researchers interested in
learning more about the on-demand workforce. We have done this because
rigorous and credible research can help ground and advance important
matters of public policy for the entire ecosystem.

This
week, MIT’s Center for Energy and Environmental Policy Research (CEEPR)
released a paper titled “The Economics of Ride-Hailing: Driver Revenue,
Expenses and Taxes,” which differs markedly from previous academic
studies on the topic of driver earnings.

For example, a study
we conducted with Alan Krueger of Princeton found that drivers across
20 of Uber’s largest US markets earned an average of $19.04 per hour, in
October 2015. A more recent study with Stanford professors estimated gross hourly earnings of $21.07¹ for all US drivers between January 2015 and March 2017.

Perhaps most surprisingly, the earnings figures suggested in the paper are less than half the hourly earnings numbers reported in the very survey the paper derives its data from. That survey, conducted by The Rideshare Guy in 2017, reports average hourly earnings of $15.68.

Why the major discrepancy? In our estimation, it comes down to a major error in the authors’ methodology.

Step 1: So, what’s the error?

The
Rideshare Guy survey asks a number of questions about how much drivers
earn and how many hours they work per week. The most important are
questions 11, 14, and 15.

Q11: “How many hours per week do you work on average? Combine all of the on-demand services that you work for.”

Q14: “How much money do you make in the average month? Combine the income from all your on-demand activities.”

Q15: “How much of your total monthly income comes from driving?”

The
problem in this case is inconsistent logic on the part of the paper’s
authors. Consider this: for question 14, the authors assume respondents
are reporting income from *all* sources, not just on-demand work. As a
result of this assumption, the authors discount the earnings from Q14 by
the answer to Q15, “How much of your total monthly income comes from
driving?”

For
example: if a driver answered $1,000 to $2,000 to Q14, the authors
would interpret that as $1,420.63² according to their methodology. If
the respondent then answered “Around half” to Q15, the authors conclude
this driver made $710.32 driving — half what they actually earned from
driving with ridesharing platforms.

However,
and perhaps just as important, the authors also assume that drivers
understood Q11 perfectly well and that the hours reported only applied
to on-demand work. As a result, they divide an incorrectly low earnings
number by the correct number of hours.

This
inconsistency leads to flawed methodology that results in hourly
earnings numbers that are far, far below what any previous study has
found....MORE

Leaving aside that Uber's chief economist appears to be throwing the drivers under the bus UberPOOL, for reading comprehension, I think we'll just have to wait for MIT's response.
In the meantime we can probably agree that this claim was, at best, just nonsense:Uber Says Its Drivers Are Making $75,000 - $90,000 A Year